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TMI Blog2023 (8) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... mmunication from Jodhpur Customs authorities dated 8 July 2023 and 12 July 2023 wherein the Jodhpur authorities have directed the respondents to seize the very goods imported by M/s ST Electricals. In the said reply, the respondents have stated that these very goods have been sold by the petitioner to Narayan Power Solutions. The situation would have been different if the Customs were to bring some materials to show that the goods in question were being allegedly dealt by M/s. ST Electricals in connivance with the petitioner or that the petitioner was not a bonafide third party purchaser. If this be the case, then the action of detaining the goods of the petitioner was contrary to the revenues own stand and this would hold good for attachment of the bank account. Thus, on the facts of the present case, the impugned action in detaining the goods in question (some other goods of the petitioner) is contrary to the provisions of the Act as noted by us moreso when same is not pursuant to any recovery of pending dues of the petitioner or proceedings pending against the petitioner under the Act. The respondents have tried to justify their action by stating that they have acted upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No. 3 bank; ii. To unseal the Petitioner s godown Premises located at Plot No. 497, Road No. 4, Steel Market, Kalamboli 410213; 2. Brief facts :- The petitioner is a proprietorship concern engaged in the business of buying and selling of CRGO sheets, scraps, etc. in local market. 3. The petitioner, in the course of his business, entered into an agreement with one Pacific Powertech Solutions (Pacific) for purchase of CRGO Strips. The petitioner made market enquiries and found that Pacific had purchased the said goods from one GSD Technology, who, in turn, had purchased the goods from one M/s ST Electricals, who is the actual importer of the goods. M/s ST Electricals is located in Jaipur. The petitioner purchased these goods from Pacific under Invoice No. 043 dated 02.07.2023, No. 044 dated 02.07.2023, No. 045 dated 03.07.2023 and No. 046 dated 05.07.2023. The petitioner, in the course of his business, sold the above-referred goods, which were purchased from Pacific to one Narayan Power Solutions and one Transel Engineers over the period of 4 July 2023 to 11 July 2023 under various invoices, which are annexed to the petition. The petitioner claims to be a bonaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer as also the decision of the learned Single Judge of the Karnataka High Court in case of Karnataka Bank Ltd. vs. Commissioner of Commercial Taxes, observed that the account in question being a cash credit account, in other words, a overdraft facility, the unutilised overdraft account does not render the banker a debtor in any sense and the banker is therefore not a person from whom money is due to the customer. It is further observed that where the banker lends money on an overdraft and the customer is always in debit there is no stage at which the banker is debtor to the customer, nor at any point of time at which he holds any money of the customer or the later s account. The Division Bench in making such observations, agreed with the view expressed in Adam s case (supra) and also in Karnataka Bank Ltd. s case (supra) holding that the respondent therein had no authority to freeze the cash credit account and accordingly such orders were set aside. In our opinion, although the issue in such case fell under the provisions of Bombay Provincial Municipal Corporations Act, 1949 (now the Maharashtra Municipal Corporation Act), however, the principles in that regard are applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 CRGO-SLIT COIL 31 (wooden pallets) 2 CRGO-STEEL SCRAP 29 (Wooden pallets) 3 CRGO-STEEL SCRAP 03 (wooden boxT) 4 CRGO-STEEL SCRAP 02 (metal box) Table-B Sr. No. Name of the Document No. of Pages 1 Sales invoice (alongwith e-way bills, etc.) 01-92 2 Purchase invoice (alongwith e-way bills, etc.) 01-92 8. It is in the light of these facts, we are called upon to consider prayers in the petition and the subsequent developments pursuant thereto. 9. As of now the only question, which requires to be considered by this Court is whether in the facts and circumstances of the present case, the respondents would have authority and jurisdiction to detain the goods and documents and attach the bank accounts. 10. We have heard learned counsel for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued as expression of any views by us on any other pending proceedings. 14. At the outset, we wish to observe that as per the affidavit of the respondents dated 31 July 2023, the goods, which were imported by M/s ST Electricals, and which are subject matter of investigation by the Rajasthan authorities, are CRGO Strips / Sheets, which are imported in violation of BIS conditions. However, as per the panchanama dated 26 July 2023, the goods detained are of the description CRGO-Slit Coil and CRGO-Steel Scrap. These two goods appears to be not the same goods. In our prima facie view, the affidavit-in- reply of the respondents would militate against the case of the respondents that the goods, which are detained, are the goods, which were originally imported by M/s ST Electricals. The respondents themselves admit in the reply that goods purchased by the petitioner, which were originally imported by M/s ST Electricals, are already sold by the petitioner. If that be so, then the said goods cannot be of the ownership of the petitioner. Therefore, the respondents are not contending that they have detained the same goods, which were imported by M/s ST Electricals, but are of similar descrip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e liable to confiscation under this Act. Sub-section 3 of Section 110 provides that the proper officer may seize any documents or things which in his opinion will be useful for or relevant to any proceedings under this Act. 19. The analysis of the above provisions of the Act would show that once the goods are cleared for home consumption and enter the domestic market for sale, such goods cannot be seized from the subsequent purchasers and that too if the third person against whom action is initiated has already sold the goods in open market and when there was no demand or proceedings pending for recovery of duty etc. against such third person. In the present case, the goods imported by M/s ST Electricals were initially cleared for home consumption by the said importer and the said goods have changed hands in open market and is also out of the possession of the petitioner. The respondents in their affidavit in reply have referred to the communication from Jodhpur Customs authorities dated 8 July 2023 and 12 July 2023 wherein the Jodhpur authorities have directed the respondents to seize the very goods imported by M/s ST Electricals. In the said reply, the respondents have stated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possession of the petitioner. Further Section 110(5) of Act empowers the proper officer during any proceedings under the Act to provisionally attach bank account to protect the interest of revenue or to prevent smuggling. We wonder as to how this provision is attracted. 22. Even otherwise, on the facts of the present case, the respondents have not referred to any material or have shown us any documents, as to how the attachment of the petitioner s bank account is to protect the interest of revenue or to prevent smuggling. Therefore, on both these counts attachment of the saving bank account cannot be held to be legal and valid. Further the provision of Section 111 provides for confiscation of improperly imported goods. Prima facie, the petitioner being a third party purchaser of the goods in question, this provision also may not be applicable. 23. We may also observe that if the case of the respondent is accepted, that the department can detain any goods in the hands of subsequent purchaser of the goods who has purchased them from the open market, then it would lead to an anomalous and chaotic situation. Illustratively, where Mr. A who imports goods and sells them to thir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h supports their contentions that the action is taken at the behest of the communication which even otherwise the respondents could not have acted upon without applying their mind. 27. During the course of the hearing, the respondents have contended that they have not seized the goods but they have only detained the goods. On a query as to whether the department would have the powers to detain the goods in the facts of the present case, we have not been pointed out any such provision which would empower the respondents in the facts of present case, to detain the goods. CONCLUSION 28. In view of above discussion, the impugned action of the respondents in detaining the goods in question and attaching the bank account of the petitioner without there being any demand due from the petitioner or any proceedings pending is without jurisdiction and without any authority of law. Accordingly, we pass the following order: ORDER (i) We declare that the detention of the goods described in Table A of the panchanama dated 26 July 2023 is illegal and the same shall be revoked on a copy of this order being presented by the petitioner to the concerned authority; (ii) The ..... 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